A better idea: deport candidates to Canada

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It was one of those now-you-see-it, now-you-don't moments in the New Hampshire debate between the Republican presidential candidates, a couple of minutes of discussion gone before you knew it."Why shouldn't we be able to re-import drugs from Canada?" asked John McCain, who then answered his own question: "It's because of the power of the pharmaceutical companies."Mitt Romney waded in."Don't turn the pharmaceutical companies into bad guys," he said."Well, they are," said McCain.Romney then tried to explain that these companies, working through the free market, make products that restore our health and constitute a significant American industry. As he went on to mention some real solutions to health-care concerns, he was super-polite, pretty much letting McCain get by with his ignoble charade.Imagine, though, that debate rules actually permitted time for sustained thought. It would then have been supremely educational and utterly justified for Romney to have said something like the following."Oh, come off it, John. If you really believe that, you are as much an economic ignoramus as the other candidates who have favored re-importation -- Ron Paul over there, who has been doing his best to give libertarians a bad name, and Hillary Clinton, Barack Obama and John Edwards, Democrats whose chief aim over the next eight years is to introduce the country to European-style socialism."Our drug companies have to charge high prices for drugs because research is very, very expensive and because the federal government puts them through endless hoops before allowing the drugs to go on the market. It can cost nearly a billion dollars from the start of the project to the end, and guess what? Sometimes the research doesn't pay off. Sometimes you come up with a dud. If you don't get the money back in the prices of your drugs, you don't have money for future projects and literally tens of thousands of people will die who would otherwise be saved by innovative risk-taking."Of course, you can do what the governments do in Canada and Europe. You can control prices outright. Or you can let the government negotiate prices, which is a way of letting the single biggest customer dictate a price lower than the companies can afford. It's pretty clear what happens when prices are controlled by either means. Drug companies don't get investments and they don't take risks and they don't innovate. Do you see now why something like three-quarters of all new, important drugs are produced by U.S. companies, not by those in Europe or Canada?"John, John -- don't nod off. You've done that on too many issues. Let's get to a question I know you want to ask. Why do the U.S. companies sell so cheaply to Canada if they need all that money? Economists explain that if they are getting back their investment plus profit from the huge U.S. market, they can then sell at a lesser price in relatively small Canada without loss. It's known as market segmentation and happens with all kinds of industries. American consumers might get steamed, but price-controlled re-importation will do most no good."Try re-importation, and drug companies will likely only sell Canada enough drugs to take care of their own people, meaning Canada itself will make sure re-importation does not occur. Even if the companies don't do this, it's unlikely the amount of price-controlled drugs available for shipping back to the United States would be adequate to drive prices down for large numbers of us. One economist does worry, though, that it might be enough to make some drug companies disinclined to engage in new expensive experiments with life-saving potential."So no, John, the pharmaceutical companies are not the bad guys. The bad guys are you, Hillary, Obama and all the other uninformed, cheap-shot artists who play these demagogic games in search of votes. There are, however, answers to the problem of high prices, such as streamlining redundant FDA drug reviews that cost the companies a fortune and keep needed medications out of the hands of desperate patients months and even years longer than necessary. Big government is another bad guy here."Romney would then cease his observations, and I would be standing up in front of my TV, applauding for all I am worth.(Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay(at)aol.com.)